Forget Nvidia: Putting $300 to Work in These 3 Unstoppable Stocks Right Now Would Be a Smarter Move
2024-09-25 12:21:00
One of the best aspects of putting your money to work on Wall Street is that most online brokers have eliminated barriers that had previously kept retail investors on the sideline. Minimum deposit requirements and commission fees for common stock trades on major U.S. exchanges are predominantly a thing of the past.
For everyday investors, it means virtually any amount of money — even $300 — can be the perfect amount to put to work in the stock market.
Walt Disney
A second unstoppable stock that can outpace Nvidia in the return column and makes for a stellar buy right now with $300 is media goliath Walt Disney (NYSE: DIS).
Few companies were clobbered more directly by the COVID-19 pandemic than Disney. The closing of theme parks, coupled with limited studio output and select movie theater closures, severely hampered its bottom line. But with China’s economy reopened and studio output ramping up, Disney is shining, once more.
Perhaps the best aspect of Disney’s operating model is that it can’t be duplicated. Even though there are no shortage of movies and shows to watch and theme parks to visit, no other company offers the history, depth of engagement, characters, or storytelling capacity that Disney brings to the table. This alone ensures that Walt Disney will continue to generate predictable cash flow from its multiple operating segments.
Something else for investors to be excited about is Disney’s progress with its direct-to-consumer (DTC) segment. After years of sizable losses, Disney delivered its first operating profit from its DTC segment. Being an irreplaceable media company has allowed it to increase subscription prices for all of its tiers and move its DTC segment to profitability a full quarter ahead of schedule.
The “House of Mouse” is also historically inexpensive. Its forward price-to-earnings ratio of 18 marks a 31% discount to its average forward-year earnings multiple over the prior half-decade. Further, Disney should be able to deliver sustained double-digit earnings growth as its DTC segment and studio begin to stretch their proverbial legs.
PubMatic
The third unstoppable stock that makes for a smarter buy than Nvidia with $300 right now is small-cap adtech company PubMatic (NASDAQ: PUBM).
PubMatic finds itself perfectly positioned to take advantage of the rise of digital advertising. Even though advertising is highly cyclical, and businesses aren’t shy about paring back their marketing budget at the first sign(s) of trouble, the aforementioned non-linearity of economic cycles works in favor of ad-driven businesses. Investors with a long-term mindset should benefit from owning stakes in companies that see ad spending climb over time.
One of the key reasons PubMatic is set for success is the decision by its management team to design and develop its own cloud-based programmatic ad platform. While it would have been easy for PubMatic to rely on a third-party provider, the decision to build its own cloud-based infrastructure should result in a decisively higher operating margin as it scales its revenue.
As noted, PubMatic has honed in on the fastest-growing aspects of the advertising arena. Specifically, it’s a sell-side platform aiming to sell digital display space for advertisers in mobile, video, and connected TV (CTV). All three of these segments can sustain double-digit annual ad spending growth for the foreseeable future, with CTV ad spend growing the fastest.
Lastly, PubMatic is sitting on a cash-rich balance sheet that gives it ample financial flexibility. The company ended June with $165.6 million in cash and cash equivalents, and no debt, and has repurchased roughly $100 million worth of its common stock. Additionally, it’s working on its 10th consecutive year of generating positive operating cash flow.
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Sean Williams has positions in PubMatic and Visa. The Motley Fool has positions in and recommends Nvidia, PubMatic, Visa, and Walt Disney. The Motley Fool has a disclosure policy.
Forget Nvidia: Putting $300 to Work in These 3 Unstoppable Stocks Right Now Would Be a Smarter Move was originally published by The Motley Fool
